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JNPR: Market Cheers Over 'Less Bad'

Stocks in this article: JNPR CSCO

For the current quarter, Juniper expects revenue in the range of $1.03 billion to $1.06 billion and adjusted profit in the range of 15 cents a share to 17 cents a share. Analysts were expecting a profit of 20 cents a share, on revenue of $1.05 billion, according to a consensus survey by FactSet Research.

It's hard for me to get all "warm and fuzzy" about this report, but nevertheless the company's stock soared as much as 7% when the results were said to have been leaked ahead of the official announcement, prompting the halt of trading. It seems the market rewarded Juniper with the reaction of "things were less bad than expected" -- and sometimes that it just good enough even though the company reported an outlook that (on the surface) appears less favorable compared than rivals Cisco or even F5 (FFIV) are expecting.

Moving Forward

I think the market also reacted to the enthusiasm that the company's CEO Kevin Johnson demonstrated when discussing the company's business and its product portfolio -- one where he referred to it as "the broadest and most robust" in the company's history. Products include QFabric, T4000 and PTX.

Clearly there is cause for optimism and CEOs don't often boast about their company's capabilities -- raising the bar and applying more pressure on themselves - particularly in a highly competitive market where once-struggling titans such as Hewlett-Packard (HPQ) also appear poised to reemerge.

The fact of the matter is companies want to grow -- there is no other objective on the market that generates a higher priority. And in pursuit of that growth, network enterprises tend to scale larger as well as require increased bandwidth to support the demand for higher traffic -- whether internally or externally to service their customers. Juniper now seems poised by leveraging both innovation as well its industry expertise to secure a bigger chunk of that market in a way that I have not seen it before.

Bottom Line

For Juniper, as great as its product portfolio can potentially be, its challenge will continue to be finding ways to grow and create the sort of momentum that inspires tech investors to believe. With competition mounting from Cisco, Hewlett-Packard, F5 and even forgotten names such as Alcatel-Lucent (ALU), Juniper may find it difficult to expect more silver linings to be extracted out of future "less bad performances."

At the time of publication, the author was long CSCO.

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